Alexander urged to resign after boasting oil tax grab was his idea

00:07Wednesday 30 March 201114:54Tuesday 29 March 2011

LIBERAL Democrat Chief Treasury Secretary Danny Alexander has bragged to a group of businessmen that the controversial £10 billion tax raid on North Sea oil revenue was his idea, The Scotsman can reveal.

The boast by the most senior Scottish member of the UK government has led to calls from within his own party to resign, as well as allegations that he is "economically illiterate".

The revelation came as Chancellor George Osborne tried to play down concerns about the impact of the windfall tax on thousands of jobs and billions of pounds of investment in the north of Scotland.

Mr Osborne was being questioned on last week's Budget by the Treasury select committee yesterday, as it emerged that the Norwegian firm Statoil had become the first oil and gas company to pull a major investment from the North Sea.

The 2 billion tax grab was Mr Osborne's surprise announcement in the Budget as a means of paying for a fuel stabiliser and cancelling future increases in petrol duty, while bringing in an immediate 1p cut per litre.

The increase means that between 62 and 81 per cent of profits from the North Sea are now taken by the Treasury, an increase of 12 per cent.

Mr Osborne told the committee he had no regrets, telling them: "It's not the oil company's oil; it's our oil."

Mr Osborne defended the "perfectly reasonable" windfall tax and said the rate was still significantly lower than in Statoil's native Norway.

He told the Treasury select committee: "They (Statoil] have not cancelled it. They just want to talk to us about their investment plans."

The policy has prompted several Scottish Lib Dem MPs to speak out in opposition to it. But at an event attended by 100 business leaders, hosted by Bloomberg, in the City of London, Mr Alexander claimed: "It was my idea, which I first proposed a few months ago."

Sources in the Treasury have confirmed he has made the claim on other occasions, too.

His comments provoked fury among senior Scottish Liberal Democrats, one of whom told The Scotsman last night that Mr Alexander should resign.

Meanwhile, Gordon Lib Dem MP Malcom Bruce criticised Mr Alexander for being "economically illiterate" for coming up with a "populist move" which could "kill off investment in the North Sea".

Mr Bruce also said the extra tax broke pledges made to the industry by Mr Osborne and the Lib Dem leader, Deputy Prime Minister Nick Clegg.

West Aberdeenshire and Kincardine MP Sir Robert Smith has also warned that the tax raid will be "economically disastrous".

Caithness and Sutherland MP John Thurso became the third Scottish Lib Dem grandee to express doubts yesterday.

He raised concerns at the select committee about investment in new oilfields to the west of Shetland.Last night, opponents claimed that the Lib Dems in Scotland, who have already been hit by the high-profile resignation of Central Scotland candidate Hugh O'Donnell over involvement in the coalition government, are in a "state of turmoil".

Labour's Aberdeen Central candidate Lewis Macdonald, a former energy minister, added: "It is shocking that Danny Alexander is almost bragging that this was his idea."

Brian Adam, SNP candidate for Aberdeen Donside, added: "This is an incredible admission. Has Mr Alexander forgotten that he represents many people who work in the offshore industry whose livelihoods rely on a stable North Sea oil sector?"

He claimed that a re-elected SNP government would "have a renewed mandate to make Scotland's 'claim of right' for a share of North Sea revenues".

But during the Treasury select committee hearing yesterday, Mr Osborne and civil servants attempted to justify the windfall tax on oil, which the Chancellor had himself criticised when he was in opposition.

Edward Troup, the Treasury's managing director for budget, tax and welfare, said: "Industry will pause to think and reflect on what has happened, but overall our analysis showed we did not think there would be a material impact on investment in the overall totality of the North Sea."

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